Apple ready to set up Indian manufacturing facility on own terms

Apple, Inc. (NASDAQ: AAPL), the Cupertino, California headquartered electronics giant, has stated its willingness to begin manufacturing iPhone in India. The company, however, wants a generous helping hand from the Prime Minister Narendra Modi government first. Apple executives will meet Indian government officials during the third week of February.

Long list of demands

Apple, undoubtedly one of the most profitable companies in the world, has asked for a laundry list of demands. Most of them are in the form of financial concessions the company expects from the Indian Government. The lengthy list of demands includes a tax holiday of 15 years on equipment and component imports. The Indian Government, on its part, is eager to see the US manufacturer to set up plants in India. This was confirmed by Ravi Shankar Prasad, the minister in charge of information technology. Further asked, the minister declined to reveal the negotiating stance of the company.

For Apple, India makes an excellent choice. The country has a population of 1.3 billion and is arguably the swiftest growing smartphone market in the world. The country has rapidly grown in importance as sales flatten in China and in the United States. Tim Cook, Apple’s Chief Executive Officer, visited the country in May and asked for government approval so that the company can open own stores.

Apple has a substantial list of demands. It had sent a request list in advance for its meeting with a number of government departments, including the department concerned with Electronics and Commerce. The US Company has also asked for waiving customs duties for both used equipment and new ones what are imported into India. According to a prominent Indian media house, Apple has demanded complete exemption from raw materials, capital equipment and components duties. However, it can be reasonably said that the company will not stress on extracting every concession.

Response of the Indian government

India, for its part, has also listed a number of demands. It has insisted that Apple follow other single brand retailers and source about 30 percent of its components from Indian manufacturers. The country has scaled back its strict rules so that technology firms can manage stores for a period of three years prior to satisfying this requirement.

Apple does not have its own manufacturing facility. It inks partnerships with a number of contract manufacturers to handle capital intensive requirements of hiring staff and building factories.

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